Hewlett-Packard, Compaq and more

CBS.MarketWatch.com

After the close of trading Friday, AMC Entertainment
AEN
said it has agreed to buy bankrupt General Cinema for $175 million to $195 million in cash, notes and stock. The final price will depend on a bankruptcy court's decisions. AMC has 177 movie theaters with 2,836 screens. General Cinema, one of several big movie chains to file for bankruptcy in the past two years, operates 73 theaters with 677 screens and has stakes in 17 theaters with 160 screens. Other failed chains include United Artists Theater Co., Edwards Cinemas and Carmike Cinemas. Shares of AMC closed at $14 Friday, down a nickel.

The Mail on Sunday, a British newspaper, reported that British Airways
BAB, +0.10%
(BAY) had sealed a deal to join forces with American Airlines
AMR, +27.78%
The partnership would see both airlines share transatlantic routes and was secured with the personal intervention of UK Prime Minister Tony Blair, according to the paper. BA will announce the deal on Jan. 7 but first it has to be approved by the Department of Transportation, the Mail on Sunday wrote. Shares of AMR Corp., parent of American, ended Friday up $1.30 to $23.34.

AT&T's board reviewed bids for Ma Bell's broadband unit Saturday, but afterward the company said it hasn't decided what to do with its cable business.

Among the bidders, AOL Time Warner
AOL
would like to add to its existing cable network. Comcast
CMCSK
and Cox Communications
COX, +6.02%
would also like to add to their networks and reportedly have backing from Microsoft
MSFT, -1.70%
which wants to block an AOL deal and also enhance alliances for its MSN Internet operation. AT&T
T, -1.65%
was not expected to announce a winner. See full story.

In other merger news, United States Steel
X, -3.57%
confirmed on Sunday that it's engaged in talks to buy National Steel
NS, -1.14%
Still, U.S. Steel cautioned that a variety of conditions need to be met before a deal can be sealed. See full story. Shares of United States Steel closed at $18.27 on Friday. National Steel ended at $1.57.

A hedge fund manager said in Alan Abelson's Barron's column this week that an upcoming psoriasis drug manufactured by Biogen could help the company increase earnings to $3 a share by 2003. Larry Feinberg, manager of the health-care hedge fund Oracle Partners said he sees Biogen's
BGEN
stock rising to as much as $100 in 12 to 18 months, up from $57 on Friday. A competing drug to Biogen's best-selling product, Avonex, won't gain access to U.S. markets until about May of 2003, he told Abelson. See full story.

A Barron's weekend article raised doubts about the product pipeline for biotech drug firm Chiron
CHIR
Barron's reported the company is banking on a new drug that helps blood banks screen donors for HIV and hepatitis. But blood banks say the FDA isn't likely to approve the drug till late next year, a discrepancy that Barron's noted led to a Thursday downgrade by Geoffrey E. Harris of UBS Warburg. Barron's also pointed to the roadblock recently for a Chiron drug to fight blood poisoning. Chiron shares shed 57 cents Friday to $44.44. See full story.

Human Genome Sciences
HGSI
meanwhile, presented data on three products for cancer-related treatment at a meeting in Orlando, Fla., over the weekend. The company indicated that the treatments were promising. On Friday, Human Genome closed down $3.92, or 9.8 percent, to $36.09.

Enron Engineering & Construction Company and Enron Engineering & Operational Services Co. both filed Chapter 11 petitions. That brings the number of Enron
ENE, +0.00%
businesses, including the parent, to file for protection up to 19, said spokesman Mark Palmer. Read more. Shares closed the regular session up 9 cents to 75 cents.

After the closing bell Friday, Everest Re Group
RE, -1.65%
said its loss related to Enron would be roughly $25 million after reinsurance and tax recoveries. The loss will affect its fourth-quarter net income by roughly 50 cents per share. The company is currently expected to earn $1.26 per share for the fourth quarter, according to Thomson Financial/First Call. Shares closed up 1 cent at $69.25.

Gateway
GTW
amended a 1999 investment deal with America Online
AOL
that originally called for America Online to buy $400 million in Gateway Series A convertible preferred stock. Now, America Online will buy $200 million of Series A and it will swap $200 million of Gateway convertible debt for shares of a new class of Gateway Series C convertible preferred stock. Gateway will continue to distribute and promote AOL's products and services and Gateway will promote its products and services in AOL Time Warner's offline media.

In Friday's regular session, shares of Halliburton
HAL, -1.60%
dropped 42 percent to $12 after the oil service giant said a jury in Baltimore awarded $30 million to plaintiffs in an asbestos case against it. Shares reversed their regular-session plunge to trade higher on the third market. In evening action, shares moved hands at $12.42. The $30 million verdict was delivered on Wednesday, according to a filing with the Securities and Exchange Commission Friday. Read more.

The David and Lucile Packard Foundation, which controls about 10 percent of computer-maker Hewlett-Packard's
HWP
stock, said it will vote against H-P's acquisition of Compaq
CPQ
Proxy vote consultants met with board members of the David and Lucile Packard Foundation on Friday. The board includes five members of the Packard family and two former executives of H-P, including former Chairman Lewis Platt. The foundation's decision could be influential on how other shareholders vote. An influential block of about 18 percent of H-P's shares are now lined up against the deal. Shares of H-P rose 19 cents to close at $23.52 and then traded at $24.45 after hours. Compaq shares lost 21 cents to $11.32 in regular-session action and then fell to $10.37 after hours. See full story.

Microsoft
MSFT, -1.70%
said Sunday that it's on track to hit its Xbox shipment goals in North America, with more than 1 million of the advanced gaming consoles already sold. Shares closed off 82 cents to $62.83.

Carpet and rug manufacturer Mohawk Industries
MHK, -1.59%
upped its fourth-quarter estimate from 74 cents to between 90 cents to 95 cents a share. Analyst polled by First Call currently expect a profit of 78 cents a share. The company noted "improvements" in all product areas compared with the first half of 2001. Shares closed up 39 cents to $50.27 ahead of the news Friday.

Netratings
NTRT
and Jupiter Media Metrix
JMXI
said the Federal Trade Commission has asked for more information about Netratings' purchase of its rival Internet audience measuring service. In the deal, Netratings is paying $1.95 per Jupiter share in a combination of cash and stock. Netratings shares closed Friday at $13.95, down 3 cents, and Jupiter shares gained a penny at $1.62.

Oxford Health Plans
OHP, -0.07%
is having difficulty raising prices in its competitive HMO market, and the company will only raise rates about 10 percent this year, Alan Abelson's Barron's column suggests. The company's COBRA health insurance for laid-off workers also could be a drag on the bottom line, said Larry Feinberg, hedge fund manager with Oracle Partners. Shares of Oxford Health rose 33 cents to close at $29.53 on Friday.

Peregrine Systems
PRGN
is set to announce Monday that it is developing software based on J2EE, an Internet Java platform. As part of the deal, BEA Systems and IBM will be reselling the new software. BEA and IBM have existing reseller deals with Peregrine. Shares of Peregrine fell $1.08 to close at $15.91 on Friday. See full story.

A Barron's story featuring wood pulp and fibers producer Rayonier
RYN, -2.07%
said the company could see better operating earnings in coming years, as pulp prices appear to have bottomed. W. Lee Nutter, Rayonier's chief executive, told Barron's that, "there's more upside than downside" in the future. The story noted that Rayonier's shares trade at roughly 21 times consensus 2002 earnings, up from an estimated $2 this year, according to Thomson Financial/First Call. Shares of Rayonier fell 60 cents to close at $45.80 on Friday.

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